RE: Too small to fail

Seth Godin—otherwise known as one of my heroes—wrote today about how big companies who act big dig themselves into trouble and how companies who act small avoid this. The basics of the idea is that by thinking small a company won’t put itself in situations where its actions will send it quickly to the deadpool. Some examples might be:

• Giving out loans that the debtors cannot statistically repay
• Getting funded by a VC firm when you have no business model
• Producing your tangible product without figuring out distribution

This concept applies very well to the web start up realm. Silicon Valley is going crazy lately because of the economic downturn, when I don’t think it needs to. The problem is that so many companies think they can get by on someone else’s dime without having to worry about providing for themselves, let alone a firm whose business it is to have you provide for them.

So what are some simple things we can do to act small?

1. Know how you are going to make money. Your product can be amazing, but that doesn’t mean it will provide revenue. If it doesn’t make money, it’s a hobby. Don’t take this too literally, but understand you probably made your company to make money while doing something you’re passionate about, so why slack off when it comes to monetizing it? YouTube has trouble making profit. Hulu does not.
2. Don’t buy useless crap. Espresso machines, aluminum die-cut business cards, and extensive phone system, while cool, are not necessary for your company to succeed. If you think you need them, find a cheaper substitute. Set up a permanent chat room for your employees or use voice chat via Skype or Ventrilo.
3. Do your own PR. Look at Gary Vaynerchuk and the things he says. Publish a blog for your company, or a podcast, or a Twitter account, or a Facebook app. Be social and you will bring attention to yourself. A PR firm will just be contacting the same media you would anyways, so why not let them come to you because you stand out and are a remarkable company?
4. Make time for yourself. This contradicts what a lot of entrepreneurs say. Rather than convincing yourself that being passionate is about spending more and more hours on your work, reason with your body and realize that this mentality will still be around even when you have “made it.” Work smart and let things progress on their own schedule. More importantly, make the best of the time you do work. A lot of people can get done in 3 or 4 hours what they spend an entire workday doing. It’s ridiculous. Look to Tim Ferriss for more on this. Companies who act big get lost in themselves and lose scope of who they really are.
5. Resell yourself. The guys at 37 Signals have a book titled Getting Real which they sell in multiple ways. You can view it for free in HTML, buy it in paperback form, or buy the PDF version. Not only that, but they also promote it during conferences and sell higher-price lectures, lessons, etc. related to it. The key here is to not gamble your product by offering it to everyone at one set value. Include as many demographics and price points as you can to include everyone possible. Some people will just never pay a cent for anything, and some won’t pay anything less than $200 for something they want as advice.
6. Tie your personality into the brand. The company isn’t the image anymore. The company is the baby of the founder—it’s how the creator leveraged his personality to establish a brand that is likable and something people want to share or talk about. Don’t act big and treat your company like it’s some monolithic entity that has a mind of its own; rather, tie the brand to your personality and let everyone know it’s something they can relate to or something that they want to be a part of. Steve Jobs does an amazing job with this at Apple. He thinks big but acts small, and that makes people want to be in the party by making his company feel cool, and he lets them in (for a pretty penny at that).
7. Get it done. Acting small means making things happen. Just do it, as Nike would say. If you act small, you’re the game-changer who performs consistently and wins by taking on calculated risks rather than gambling big and either winding up an IPO or going back home. Toyota does this very well by practicing the philosophy of kaizen—small and steady improvements to make drastic changes over time. Making small changes requires dedication and persistence, but it is much more rewarding than making large changes. Ask GM and Ford.

Do you think acting small is the way to go? What other things do you do to act small?

This entry was posted on Tuesday, October 21st, 2008 and is filed under Randomness. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or Trackback from your own site.